Lebanon’s finance ministry this week announced it will no longer pay maturing Eurobonds – around $30bn is due until 2037 – following its first ever default earlier this month (MEES, 13 March). While the Lebanese government’s ability, and its willingness, to repay its debt was already in question, the latest announcement signals that the small country will opt for a total overhaul of its $90bn debt (a whopping 170% of GDP).
The obvious choice would be a structural adjustment program with the IMF, but Lebanon has so far balked at the idea (MEES, 28 February). Such a program would need to not only restructure the debt and foster economic growth, but also address the distinct-but-related banking and currency crises that have seen the Lebanese Pound slip 60% against the US dollar, despite an official peg, as undercapitalized banks restrict withdrawal from US dollar accounts (MEES 20 December 2019). (CONTINUED - 141 WORDS)